Yesterday’s 3-digit gain was all but completely wiped out by today’s only slightly less 3-digit loss as all the optimism that has driven the market in recent days evaporated and the old fears over trade, global growth, and Q4 took over again, triggered by a report that the all-encouraging China talks that had been scheduled were now canceled.  The IMF confirming growth slowdowns and China confirming its own slowdown as well as the latest Q4 reporting disappointing added to the 301 point sell off on the Dow.  12 percent of the S&P has now reported in and only about 78 percent have thus far beaten forecasts.  The shutdown has also added to the angst as one of the casualties of the Great Standoff over the Great Wall has been a dearth of data reporting on the economy.  Volume was a little below recent averages at just under 8 billion. 

tue  JANUARY 22, 2019 / 5:10 pm 

Wall Street drops as economic outlook, corporate forecasts sour

Stephen Culp

DJ:  24,404.48  -301.87        NAS:  7,020.36  -136.87         S&P:  2,632.90  -37.81      1/22

NEW YORK (Reuters) - U.S. stocks ended lower on Tuesday, snapping a four-session rally, as a gloomy global economic growth outlook, trade concerns and disappointing company forecasts dampened sentiment.  All three major U.S. stock indexes pared losses after White House economic advisor Larry Kudlow denied a report by the Financial Times that the Trump administration canceled preparatory trade talks with China.  Still, the S&P 500, the Nasdaq and the Dow all posted their biggest one-day percentage drops since Jan. 3.

On Monday, the International Monetary Fund trimmed its 2019 global economic growth estimates, and China confirmed its slowest economic growth rate in 28 years.  “There seems to be a plethora of negative news regarding the global economy and China and the corporate profits that were reported today couldn’t offset that,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.  “A lot of companies are coming out with earnings this week, so it’s going to be a battle between earnings and the perception of what’s going on China and the global market,” Carlson added.  The downbeat China news pulled chipmakers lower. The Philadelphia SE Semiconductor index .SOX fell 2.9 percent.

Each of the FAANG momentum stocks, Facebook Inc (FB.O), Apple Inc (AAPL.O), Amazon.com (AMZN.O), Netflix Inc (NFLX.O) and Google parent Alphabet Inc (GOOGL.O), ended down between 1.6 percent and 4.1 percent.  Fears of a slowdown in corporate profits mounted as companies posting fourth-quarter results provided disappointing forward-looking projections. 

Johnson & Johnson (JNJ.N) dropped 1.4 percent after its 2019 sales forecast fell short of analyst expectations.  Shares of Stanley Black & Decker Inc (SWK.N) tumbled 15.5 percent after its disappointing 2019 forecast. 

The Dow Jones Industrial Average .DJI fell 301.87 points, or 1.22 percent, to 24,404.48. The S&P 500 .SPX lost 37.81 points, or 1.42 percent, to 2,632.90 and the Nasdaq Composite .IXIC dropped 136.87 points, or 1.91 percent, to 7,020.36.  Of the 11 major sectors of the S&P 500, all but utilities .SPLRCU closed lower. Industrials .SPLRCI, energy .SPNY, communications services .SPLRCL and consumer discretionary .SPLRCD had the largest percentage losses. 

With just over 12 percent of S&P 500 companies having reported thus far, 78.7 percent have beat expectations. Analysts expect S&P 500 fourth-quarter earnings growth of 14.1 percent, down from 20.1 percent on Oct. 1, according to Refinitiv data.

Oilfield services company Halliburton Co (HAL.N) declined 3.1 percent as falling oil prices LCOc1 and slowing U.S. demand weighed on fourth-quarter results.  International Business Machines Corp (IBM.N) rose in post-market trading after reporting a smaller-than-expected drop in fourth-quarter revenue.

During the dearth of U.S. economic data stemming from the government shutdown, a report from the National Association of Realtors showed U.S. sales of existing homes fell in December to the lowest level in three years.  The PHLX Housing index .HGX fell 1.8 percent.

Declining issues outnumbered advancing ones on the NYSE by a 3.16-to-1 ratio; on Nasdaq, a 3.15-to-1 ratio favored decliners.  The S&P 500 posted 3 new 52-week highs and 1 new low; the Nasdaq Composite recorded 19 new highs and 33 new lows.

Volume on U.S. exchanges was 7.97 billion shares, compared to the 8.24 billion average over the last 20 trading days.